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21 November 2017
| James Pearce
The US Justice Department has launched legal action in order to block AT&T’s proposed $85 billion acquisition of media giant Time Warner.
The department claims the merger would reduce competition
and potentially lead to higher consumer prices by concentrating
too much control of media properties under one company. The DoJ
claimed in its complaint AT&T would have the "incentive and
ability" to charge rivals "hundreds of millions of dollars
more" for the right to distribute content from major Time
Warner properties including HBO and CNN.
The Justice Department has previously said it prefers
structural remedies, such as the divestiture of assets, over
behavioural conditions which were commonly imposed under the
Obama administration. That may include offloading assets such
as DirecTV, owned by AT&T, or Time Warner’s
Turner Broadcasting arm.
AT&T claimed the suit was a "radical and inexplicable
departure" from typical antitrust practice, vowing to fight the
The lawsuit comes amid reports in the US that the Trump
administration had challenged AT&T to sell of Time
Warner’s news division CNN in order to push
through the deal, claims denied by the operator’s
CEO. President Trump has repeatedly criticised CNN, labelling
the network "fake news", but also opposed the deal when it was
announced last October during the presidential campaign.
Attorney General Jeff Sessions last week refused to answer a
House Judiciary oversight hearing question on whether the White
House tried to influence the merger review, saying the Justice
Department has a policy of not revealing privileged
David McAtee, senior executive vice president and general
counsel at AT&T, said: "Vertical mergers like this one are
routinely approved because they benefit consumers without
removing any competitor from the market. We see no legitimate
reason for our merger to be treated differently.
"We are confident that the Court will reject the
Government’s claims and permit this merger under
longstanding legal precedent."